ScotProv Intl warns of life tax changes

Scottish Provident International is revamping its literature on trusts in a bid to warn IFAs about possible future changes to life insurance policyholder taxation.

The guides have been updated to draw IFAs&#39 attention to the likelihood of the dead-settlor rule being changed by the Inland Revenue.

In October, the Government ditched plans to revamp taxation on investment bonds following widespread anger from the industry.

The Revenue proposals included axing the 5 per cent annual withdrawal allowance for investment bonds.

But the Revenue still plans to investigate tax-avoidance schemes such as the dead-settlor rule, which allows tax to be avoided by claiming on a policy after the settlor&#39s death. This loophole can be exploited by placing policies in trust.

Scottish Provident International is offering IFAs a summary of key benefits for each of its trusts. This offers general guidance for brokers unfamiliar with trusts, those using SPI&#39s trusts for the first time and those who want to be up to date with possible rule changes.

Around four million, or 5 per cent, of all life policies in force are written under trust.

Technical development manager Bob Easton says: "The production of the new material is part of the company&#39s commitment to ensure that advisers and their clients receive the most practical assistance from Scottish Provident International.

"We pay particular attention to ensuring that advisers are well equipped to deal with the increasing technical nature of the business by offering technical advice over the phone, holding regular seminars and providing personal support.

"Giving regular advice on the use of trusts has given us an insight into the real issues faced by advisers."

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